Monterey County adopts tighter financial controls, clarifies 25% TOT road‑fund guideline

The Monterey County Board of Supervisors on Tuesday adopted revised general financial policies that change how departments manage budget appropriations and clarify the county dministration's role in approving transfers.

The budget director, presenting the proposals for fiscal year 2026–27, said the key shift is to establish appropriation control at the "major expense category" level (salary and employee benefits; services and supplies; capital assets; other financing uses) rather than at the broader budget‑unit level. "After the adoption of the budget, no transfers between major expense categories within the same budget unit [will occur] unless approved by the CAO office," the director said during the presentation.

County staff framed the change as a transparency and control measure tied to a forthcoming finance system upgrade. Assistant CEO Michael Beaton said the move aligns Monterey County with peer jurisdictions and the accounting system the county is implementing: "If we don't put this measurement in place now, it will be significantly harder to put it in afterwards," he said.

Why it matters: supervisors said the revision gives the board clearer oversight of general‑fund uses and prevents departments from repurposing salary dollars into services or capital without CAO review. The board also clarified language about transient‑occupancy‑tax (TOT) contributions to the road fund: members directed staff to remove the word "capped" and state the policy is currently set at 25% of TOT revenue, a change supervisors said was necessary to reflect board intent during budget development.

The presentation included other technical updates. Staff proposed adjusting the county—ompensated‑absences assignment to maintain a reserve equal to 10% of the liability shown in the annual comprehensive financial report; that change would reduce the current assignment from roughly $8.36 million to about $5 million, freeing approximately $3.4 million the county could redirect as one‑time funds or return to strategic reserves.

Board reaction and vote: Supervisors asked for department-level outreach and greater clarity on implementation and departmental impacts. Several members acknowledged the shift would reduce some departmental flexibility but said tighter controls were warranted in the county—inancial climate. After the discussion the board voted unanimously to adopt the revised policies and the clarified language regarding the TOT road‑fund contribution.

What happens next: Staff will return with implementation details and work with departments to identify transition steps and any practical impacts for service delivery. The board directed departments to coordinate with the CAO's office to avoid unintended service interruptions.